Oil prices decreased as demand worries trumped supply risk in the global commodities market. In its most recent prediction, the Organization of Petroleum Exporting Countries (OPEC) remains optimistic about global demand growth.
Meanwhile, supply fears have subsided in Libya, but demand expectations in China remain bleak, despite efforts to bolster the economy. According to the most recent data, US crude oil stockpiles have decreased, implying that the US demand outlook has weakened in the wake of the Fed rate drop.
Brent crude fell 2.5% to $71.19 a barrel early Thursday. The US benchmark West Texas Intermediate (WTI) slid 2.5 percent to $67.88 a barrel.
The UN Support Mission in Libya announced Wednesday that Libya’s House of Representatives and the High Council of State in Tripoli reached an agreement to appoint the head and deputy of the Central Bank.
The eastern-based Libyan government, headed by Osama Hammad, had declared ‘force majeure’ in all oil fields, ports, and institutions and the suspension of oil production and exports due to disagreements over the management of the Central Bank in August.
The expectation that oil production will return to normal levels with the stabilization of the country puts downward pressure on oil prices. Meanwhile, the concern that the stimulus plan announced in China will not be enough to stir economic movement continues to impact oil price decline. Analysts worry that weak crude oil demand in the world’s largest oil-importing country will lower global demand.
Experts say the People’s Bank of China (PBoC) needs to announce a more concrete fiscal approach to support economic growth in the nation. Meanwhile, the fall in US commercial crude oil reserves limited downward price movements by reflecting market perceptions of a stronger domestic demand.
Data from the US Energy Information Administration (EIA) released late Wednesday showed a significant drop in US crude oil inventories.
US commercial crude stocks fell by around 4.5 million barrels to 413 million barrels for the week ending Sept. 20, higher than the market prediction of about 1.3 million barrels. OPEC expects global oil consumption to increase to 112.3 mbls/d in 2029 and further to 120.1 mbls/d by 2050 compared to 102.2 mbls/d in 2023.
The demand growth slows down post-2030; however, the organisation does not expect the peak of oil demand in the foreseeable future even as investments in alternate fuels have increased. On the other hand, OPEC sees US crude oil supply peaking by 2030 and declining gradually later on as shale oil production falls.
